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Thursday, March 30, 2017

Capitalism a hobby: attempting to understand the role of money in capitalism

Posted by steve on August 13, 2012

The conversion of capital from one form to another

Continuing with my hobby: capitalism, I have come as far as defining different types of capital. Please note that I have not yet taken on the task of actually defining capitalism. This is getting to be a life-long hobby instead of a temporary fad.

To take the analysis one step further let us consider the conversion of one form of capital from the other.

Let’s start with natural capital, encompassing soil, forest, water and minerals like iron as well.  Natural capital feeds (a) into man – made capital, for food, water  and housing systems, for example. Man-made capital feeds nutrients back into the natural environment, to allow growth and ecological maturity (b).

Human capital includes  know-how (could be called technology) is applied to produce man-made capital like housing and transport systems  (c).

Human capital  can be used to create social capital (specialized organisations) that in turn can create more man-made capital (e) . Or indeed, this social capital of specialised organisations can create knowledge and increase human capital.

Now. Where does money, or the store of money called financial capital come in?

As an accounting system

According to my studies,  money should act  as an accounting system.  So you would think that it would keep track of the capital conversions, to provide an overview to ensure that capital conversions promote ecological maturity whilst ensuring a standard of living for all.

Call me old-fashioned, naive or what, but I cannot see how money is doing that. Or if people are using money to do that.  If it were, we would be seeing the status of capital conversions and system performances trounced on the news regularly. We don’t. We see only financial measures of financial wealth, like the value of the stock market.

As a medium of exchange

Here I think I see some use of money in capital conversion. As owners of “bits of capital” swap form(like using money  to buy the expertise of a builder who converts natural, human and man-made capital to more man-made capital)  or indeed bits of the same form (Like  a university that buys a lecturer’s services). This creates another problem, though. The way money is created as credit it is hardly a representative means of exchange. A person who borrows to build a house and then sees the house repossessed by a bank sees capital being created out of nowhere, converted to man-made capital and then the man-made capital changing hands using the money that dis not exist from the beginning.

This is one of the central problems of today’s money system: it is useless as an accounting system that counts anything of real worth, and that it is at best, dysfunctional as a means of exchange if it is created as credit out of thin air.

Please, do not make HUNGER a GAME

Posted by steve on August 9, 2012

US drought threatens the food supplies of millions around the world, and as supplies dwindle before the next growing season produces more, we are likely to see food prices spiral upwards. That means the poorest citizens will be hit hardest and that in turn raises the threat of civil unrest.

Micheal Klare

This analysis comes from Michael Klare a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author, most recently, of The Race for What’s Left (Metropolitan Books). Read his article here.

The world food situation is worrying to say the least. Despite being able to point with pride to many achievements including traveling to the moon, hunger is prevalent in poor countries and sadly, even in rich countries. Our applicant from the USA, Growing Power, points out that 65% of children in Milwaukee are under-nourished.

A growing population, increased mechanization and fossil fuel dependency despite warnings we have reached the peak of cheap oil production, climate change, soil depletion are just some of the factors pointing to a coming food catastrophe.

What is worrying, too, is that Michael Klare couples the current situation to the narrative of the book and film Hunger Games. The film depicts a time when food shortages, having caused major unrest that was brutally crushed, dominate society and are used by the elite to keep a massive underclass subservient. The degree of control exerted goes to the point where citizens are not allowed to forage for their own food, grow their own food or even sell food to each other. A merciless state makes children compete to the death just for food baskets.

Signs of these tendencies exist already, where citizen’s food gardens are destroyed by local authorities. Furthermore, the drive to efficiency is reducing the number of species and varieties of food crops, vastly decreasing resilience to challenges to the food system.

From my perspective, having the privilege of being insight into possibly some of the worlds most innovative approaches to food security creation, I also get an insight into the challenges facing our applicants and their communities. The situation is not getting any easier, either for the children of poor Milwaukee residents, or people living in villages in India affected by climate change.

The latest wave of extreme weather will have consequences: when the current challenged harvest has been consumed there may not be enough to go round. We need to prepare to show our best sides, we need community and we need kindness, kindness like that shown by applicants such as Incredible Edible in England. Making sure we all have enough food is too important to be trusted to supermarket chains, charities or governments: it is part of being human, understanding we all need food is part of our humanity. We feel good when we invite each other to food, and share meals together. We feel good when we see schoolchildren are well-fed like in the schools in the SEANET project. For government, peace organizations and even law enforcement personnel this could be a challenging time, hunger makes people desperate, even the threat of hunger raises tension.

I urge everyone to look around and consider, in your local community, in your garden, in your profession, what can you do to ensure water and food for all?

And please, as times may get tough, don’t make hunger a game.

Read more.

Money makes the world go …. green?

Posted by steve on August 7, 2012

Just suppose we all decided  – and I mean all of us, politicians, corporates, national economic policy experts, universities, bus drivers, dog owners .. you get the idea… to demand that, apart from everyone doing their level best to live sustainably, that a monetary system would be put in place to drive development in that direction.

Just suppose…. Humour me, this is a post on my new hobby – capitalism. It’s quite a fun hobby, I have been posting for several months and still haven’t come to the core of defining capitalism.  Maybe, as some say, there is no definition. In which case it’s better to get on with the job in hand and look at how this money system could be set up.

One theme  is in the diagram below. Quite simply, the aim of policy would be to drive development into the top left-hand corner. From people not having enough to eat to having sufficient. From environmental services being degraded to eco-systems maturing.

Alternative outcomes for economic policy

Now it might seen like nation economy policy makers have a lot of tools at their disposal. Forgive me if I have this wrong, but I can only count three: economic laws, interest rates and taxes.

That is not a lot to play with, but given the idea of introducing flexible fees to provide a mechanism to control engineer the economy, it might be possible.

Let’s look at each square of the matrix in turn. As the bottom left, worst case, is a combination of the other two we can analyse community challenge and eco-challenge.

Eco-challenge is where the needs of the community are being met, but at a price. Ecosystem services are depleting and so are minerals.

Here flexible fees kick in. Basically it works like this: A point where eco-system services are being degraded is identified. This is done by looking at the supply chain of essential goods and services. The substances that are the main cause are identified and traced back to where they are either imported or extracted. The extraction or import of these substances is subjected to a fee. The fee is raised or lowered at regular intervals at sufficiently large intervals until market behaviour changes.

At the same time, a large part of the fee collected goes back to the population via general tax rebates, for example. The effect is that substances, or practices with these substances, become relatively more expensive. Non-polluting things become cheaper. Investment flows to these now more competitive alternatives.

Read more in the white paper http://avbp.net/wordpress/wp-content/uploads//whitepaperFE_V2.pdf

But it need not stop there, there is plenty more that can be done. Take for example taxes. Every item for sale has a VAT – Value added tax or Sales tax levied on it even if it can be zero. And every item is coded in international systems for classifying what kind of item it is.

However, even though these systems distinguish between books and luxury items, food and alcoholic beverages, they do not distinguish between products and raw materials that are guaranteed organic. A simple twist of accounting could produce this – well maybe not simple but it is not rocket science.

Again, putting, say 25% VAT on industrially grown lettuce and 6% on certified organically grown would increase the competitiveness of the organic products.

The next blog will tackle how the monetary system  can tackle the community challenge.

And maybe the next next I will consider what is stopping the simple development of accounting and taxation that could create the saying “money is making the world go green”.